re: My faith in Bitcoin just went out the window(Posted by WikiTiger on 3/7/13 at 5:35 pm to TheOcean)

quote:So how is the individual protected?

Individuals can protect themselves in a variety of ways.

Encrypting your wallet is the best way.

Individuals can also choose to store their bitcoins with a third party company, similar to the way we currently use banks. It is up to the individual to determine if the company is trustworthy and has taken the proper security measures to protect their bitcoins.

re: My faith in Bitcoin just went out the window(Posted by TheOcean on 3/7/13 at 5:37 pm to WikiTiger)

I consider myself pretty computer savvy, but everything you just mentioned throws up a bunch of red flags.

There is very little about the internet I find trustworthy, why would I trust a bunch of third party companies to take care of my money? What are my avenues for collecting damages if something happens?

re: My faith in Bitcoin just went out the window(Posted by WikiTiger on 3/7/13 at 5:41 pm to TheOcean)

quote:I consider myself pretty computer savvy, but everything you just mentioned throws up a bunch of red flags.

You might want to reconsider your level of savvy.

quote:why would I trust a bunch of third party companies to take care of my money?

Why do you trust banks to do it?

FWIW, I don't like the idea of using a third party to store your bitcoins. I think it's stupid. One of the major benefits of bitcoin is that you no longer need a bank (or third party). But some people choose that option. It's not up to me to tell other individuals how to handle their own money, though.

quote:What are my avenues for collecting damages if something happens?

If entrusted with a third party? I'd imagine you could sue them, or if they were insured then their insurance company would handle all that.

If you were storing your bitcoins yourself and someone somehow gained access to them, then I'd imagine you'd have the same recourse as if someone stole a wad of cash from you. Theft is theft.

re: My faith in Bitcoin just went out the window(Posted by WikiTiger on 3/7/13 at 6:02 pm to Vols&Shaft83)

quote:So, are bitcoins legally considered property?

That is a very silly question.

Legally considered property? What does that even mean?

I guess I'll start by defining property as being anything you can own. Does it have to be tangible? No, after all, we do have "intellectual property" in the US. Bitcoins are controlled by a private key, which is basically a very long string of numbers and letters that represent a very long number. You can physically see that string. You can print it out if you want. And there is a value that goes along with it. For each full bitcoin that string controls, the current value is about $42.

If someone breaks into your computer and steal your wallet, then they have stolen something with an actual value of whatever your wallet was worth at that time.

For further info on the legal status of bitcoins, however, you can check out this list of cases from around the world:

If someone steals my debit//credit card I'm not liable for a dime. If a retailer try's to screw me, banks will typically have your back. Name one legitimate case of a bank being untrustworthy with cash deposits.

If someone steals my debit//credit card I'm not liable for a dime. If a retailer try's to screw me, banks will typically have your back. Name one legitimate case of a bank being untrustworthy with cash deposits.

You missed my point and made it for me at the same time.

You trust your bank because they have earned your trust by implementing policies that you feel mitigate the risk you take depositing your money with them.

Some people might trust third party companies that handle bitcoins for many of the same reasons. Who knows what their motivation is? The point is that they trusted them. Whether or not it was a good decision is debatable.

Do you think it's possible that a company that handles bitcoins could be secure and build up a trustworthy reputation?

quote:So was this company considered "reputable" before this little snafu?

Yes, and to be honest, I see no reason why they shouldn't still be considered reputable.

I am assuming most people didn't even read the article and instead relied on the sensational headline to form their opinion, but here's what happened, quoted from the article in the OP:

quote:The criminals were able to take control of Bitinstant’s internet domains by convincing its domain registrar, Site5, to hand over control of the company’s Domain Name Service, or DNS. “Armed with knowledge of my place of birth and mother’s maiden name alone (both facts easy to locate on the public record) they convinced Site5 staff to add their email address to the account and make it the primary login,” the company said Monday in a blog post detailing the incident.

With control of the DNS, the bad guys also had control over Bitinstant’s email. They then did an online password reset at a Bitcoin exchange called VirWox and started emptying Bitinstant’s account. The total haul: $12,480.

So, for one thing, it wasn't even a technical hack. It was a social engineering hack. Second, it was their DNS provider that screwed them over.

But not only that, the only party that suffered any damages was the BitInstant company itself.

No customers were harmed.

You know why?

Because BitInstant doesn't store people's bitcoins for them. That's not what their business is.

BitInstant allows people to quickly use cash or other methods to procure bitcoins. You don't even need an account with them. You can take some cash to a WalMart, send a MoneyGram to BitInstant, and have bitcoins in your wallet on your own computer by the time you get home.

So, again, I just don't understand why anyone with half a brain would think the article in the OP was an indictment of bitcoin, but when people just read sensational headlines instead of the articles, I guess that's what you get.